NEW DELHI: The government on Wednesday said that a person, who may have been stranded in India due to suspension of international flights, may be categorised as an Indian resident for tax purposes but there is little possibility of dual taxation due to double taxation avoidance agreements.
“As the Budget didn’t give any specific relief to people stranded in India on account of tax residency, this clarification was expected. The 182-days condition is kept as it is, use of tie breaker rule and OECD guidance on tax residency getting incorporated shall be of much help,” said Amit Maheshwari, managing partner and international tax lead at Ashok Maheshwary & Associates.
A person is considered a resident if the duration of the stay is over 182 days and
his income from Indian sources is over Rs 15 lakh during 2020-21. Alternatively, a person of Indian origin or a foreign citizen can be treated as a resident for tax purpose if she stays in India for 60 or more days in 2020-21 and had spent 365 or more days in the country during the preceding four years.
While recognising that there may be some persons who may be Indian residents even if they had stayed for less than 182 days in the country during the government said that there may be a possibility of dual residency. But it is unlikely that their income will be taxed in India and the government cited the double taxation deals with the US, which provides that dual residency will happen if the person has permanent homes in both or none of these countries, her centre of vital interest can’t be determined, is a national of both the states or neither of them or has a habitual abode in both or neither of them.